In: Economics
Consumer income decrease when seller put the burden of sales tax on them. Since consumers are risk-averse tax burden leads to reduce their disposable income. Consumer prefer to avoid the taxes thus, they move towards online shopping in order to exempted from paying the sales \(\operatorname{tax}\)
Evidences shows that Country G prefer printed books or traditions books over e-books while US citizens prefer e-books more than the tradition printed books, even after-tax price of traditional books is less in Country G. thus, it a contradiction situation that people prefer purchasing online after increase in sales tax. not similar to that in the Challenge solution because under Challenge Solution Country G consumes more e-books even after-tax price of traditional books is less.
Here, option \(\mathbf{A}\) is correct that is different explanation because online goods are traditional goods are imperfect substitutes thus increase in sales tax would not affect online purchase by that much percent.